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Construction Loans

As well as offering a range of products for the purchase of residential property, LoanAustralia lend funds for the construction or structural renovations of residential property.

How can we assist?

  • A construction loan is available through Permanent Custodians Limited as trustee for ANZ Banking Group. This product requires 5 progress inspections at $330 each and a one-off progress administration fee of $250 is payable on settlement of the loan.

Our construction loan requires a fixed priced building contract and we do not accept owner-builders or fund large scale residential developments.

To approve your loan application we first instruct our valuers to inspect the land where you propose building the property to determine the value of the land and then estimate what the property would be valued at on completion of the construction using the details and specifications contained in the fixed priced building contract. We then lend off this value, up to a loan to value ratio of 95%.

The redraw facility on the loan account is locked until completion of the construction as all funds must be controlled by LoanAustralia. This means that progress payments to the builder must be made directly from the funder to the builder, the borrower does not receive the funds. This means that the borrower must send LoanAustralia the builders invoice prior to the due date to allow for a progress inspection (if required) and processing of the invoice payment by the funder.

Miscellaneous Costs

When calculating the amount of money you need to complete the purchase of the property there are a number of costs that you will need to allow for:

  • Government Fees - including stamp duty on transfer and on the mortgage.
  • Legal Fees - including conveyancing and property search fees.
  • You may also have to allow for other costs such as building and pest inspections.

First Home Owners Grant (FHOG)

If you are buying your first home, you may be eligible for the FHOG and in some states, stamp duty exemption, which could save you up to $25,000.

To be eligible for the FHOG you must be an Australian citizen or permanent resident and you (and your spouse or partner) must not have previously owned a home in Australia.

If you are eligible for the FHOG we will be able to assist you in applying for the grant.

With construction loans you should be aware that the grant is generally not paid until the construction reaches base stage. Thus you cannot rely on these funds as part of the deposit as we will require evidence of the full funds available to complete the purchase prior to approval of the loan.

Mortgage Stamp Duty

You may be required to pay mortgage duty on the amount of the new loan. We will assist you to determine the amount.

Lenders Mortgage Insurance (LMI)

The LMI fee applies only when you borrow more than 80% of the property's value (on a full documentation loan), this covers the lender if for some reason you cannot repay your loan and the property is sold for less than the amount of the loan. The cost of LMI will be added to the loan.

Building Insurance

When the construction reaches hand-over stage you will need to provide evidence that your property is suitably insured. Prior to the first progress payment we will require evidence that the builder is suitably insured.

What to do now

  1. If you are ready to proceed, check out the home loan products and select one that best suits you.
  2. Work out the amount that you need to borrow and use our calculator to work out your repayments.
  3. Apply for your loan online or ring us and talk to one of our home loan consultants to see if you qualify for a loan.

What you will need when we call you

When you apply, make sure you have the following items (we may ask for a few other things depending on your individual circumstances):

  • Details of your current employment income.
  • Details about your assets - their value and any income you get.
  • Details about your ongoing expenses and regular payments.
  • Information about the type of loan you're after and any splits you want.
  • The amount you want to borrow.
  • A copy of a fixed priced building contract (i.e. not a tender)
  • Copies of your identification eg birth certificate and drivers licence, etc.

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